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Hi mike
There is a statement as follows . On 1 April 2005 P purchased 2 million loan notes in S! On 1 April 2006, it purchased 4 million shares for 7500 ! When calculating the cost of investment, they only take the 7500 but why don’t we take the 2 million loan notes!
And the second issue is on the associate and parent unrealized profit, suppose P sells goods to A and has made a urp of 2000 but this is attributable to P so why do we only take the group percentage??
When I was a student learning about consolidations, we had a T account called “Cost of Control Account”
Tell me, how much control has P achieved when investing $2 million in a loan note?
“…so why do we only take the group percentage??”
We do this because that’s what the Interpretations Committee decided was the appropriate thing to do!
OK?
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